Consumer Health Care Finances and Education: Matters of Values

This Issue Brief analyzes recent literature about trends in the employment-based health care benefits system, proposed "market-driven" approaches to health care financing, and implications for consumers of the employment-based system. It examines the readiness of consumers to become more responsible for making health care financing decisions on their own.

This is of particular concern in light of research on population literacy levels and the difficulty many people have in understanding the current health care system and health insurance documentation. This report also explores the availability of resources to help consumers become literate and savvy in health care decision-making.

As health plan sponsors are exploring ways to offset the recent surge in rising premiums and administrative costs, two perspectives can be found in the literature on the future of health care financing. Some benefits consultants and health plan sponsors predict the readiness of empowered consumers to assume their own health care decision-making. But others express concern about problems likely to be encountered in implementing health insurance approaches where consumers select and buy their own health care coverage. The emergence of "educated, empowered consumers" in health care holds the promise (although not yet the reality) of a consumer-driven, patient-centered marketplace.

Research indicates that consumers often do not know what type of health plan they are currently enrolled in. In general, they do not know how managed care plans work and are not knowledgeable about health benefits. Many are also unaware of, or indifferent to, the potential for financial disruption in their lives following a sudden illness or injury. Understanding the differences in coverage, enrollment options, and the possible financial consequences of failing to plan adequately for health care can be difficult for anyone, but they are incomprehensible to the estimated 42-90 million Americans with low functional literacy.

There is urgent need for health benefits education that incorporates personal values, financial consequences and literacy levels in programs that support the current system and the new models of health coverage that are emerging. Since the working public looks primarily to employers to meet their health insurance needs, the nation's health care financial preparedness rests to a large extent on the willingness of organizations to continue to act as innovators, brokers, and mediators in the health care system, as well as health care education "champions" of American workers.